Shown below are comparative balance sheets for Matsui Corporation. Additional in

Question

Shown below are comparative balance sheets for Matsui Corporation.

Additional information:

Instructions

Prepare a cash flow statement for 2010 using the indirect method. Show the following selected amounts from your completed financial statement:

Calculate these cash-basis ratios.Round your answers to one decimal place.

Shown below are comparative balance sheets for Matsui Corporation.

Matsui Corporation
Comparative Balance Sheets
December 31

2010 2009 Assets Cash $ 65,000 $ 22,000 Accounts receivable 88,000 76,000 Inventories 174,000 189,000 Land 77,000 100,000 Equipment 260,000 200,000 Accumulated depreciation - equipment (66,000) (32,000) $598,000 $555,000

Liabilities and Shareholders' Equity Accounts payable $ 39,000 $ 47,000 Bonds payable 148,000 200,000 Common shares 218,000 174,000 Retained earnings 193,000 134,000 $598,000 $555,000

Additional information:

1. Net earnings for 2010 were $97,000.
2. Cash dividends of $38,000 were declared and paid.
3. Bonds payable amounting to $52,000 were redeemed for cash $52,000.
4. Common shares were issued for $44,000 cash.
5. No equipment was sold during 2010.

Explanation / Answer

Cash flow form operating activity Net profit as per Income summary 97,000 Adjustments for non cash and non operating activities Add: Depreciation 34,000 Operating profit before working capital changes 131,000 Add: Decrease in inventory 15,000 Less: Increase in accounts receivable -12,000 Decrease in accounts payable (8,000.00) Net cash from operating activities 126,000 Cash from investing accounting Add: Proceeds from sale of land 23,000 Less: Purchase of equipment -60,000 Net cash used in investing activity -37,000 Cash flow from financing activity Add: Proceeds from issue of equity 44,000 Less: Bonds paid (52,000) Dividend paid (38,000) Net cash from financing activity (46,000) Net increase in cash and cash equivalents 43,000 Add: Opening cash and cash equivalents 22,000 Closing cash and cash equivalents 65,000 Cash current debt coverage =cash flow from operations - dividends/ total debt =(126000-38000)/(148000+39000) =88000/187000 = 0.47 cash total debt coverage = operating cash flow / total debt = 126000 / 187000 = 0.67

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